Prior to the outbreak of the recent economic and financial crisis, there was a sharp increase in the demand for raw materials. Although the overheating has temporarily disappeared owing to the downturn, access to raw materials remains a highly important subject. This is because our concerns not only relate to prices but also to availability and relative prices. These factors determine industry competitiveness. Pressure will mount as soon as economic activity starts gearing up. Metals and fuels are source of our prosperity but the supply of some of these is faltering.
At present, over 40 thermal power stations have coal stocks that are barely sufficient to meet the demand for about a week. As many as 29 projects have less than four days of coal reserves. The government has asked coal companies to step up supplies to power stations facing shortage of coal to ensure that power generation is not interrupted.
A slew of factors, including less production from CIL collieries due to heavy rains, floods in Orissa and Telangana agitation, have hit coal supplies to power units. The threat of a strike by miners comes at a time when the power situation in the country is grim as many plants of NTPC, the country’s largest power generator, are running below capacity levels due to paucity of coal --the key raw material for generating electricity.
Fuel prices have almost doubled over the last year and their impact on manufacturing have been worsened by the current power shortage, which has forced most local manufactures to use expensive diesel-run generators to power systems for more than the half of their production time. Any distortions in pricing and access to feedstock have a direct adverse impact on competitiveness, given that feedstock can make up a huge part of the production costs.
Since August, the steel and allied industries in Karnataka have been facing acute shortages of iron ore, following the imposition of a mining ban in the state by the apex court. The iron ore supply crisis at JSW deepened last month when its longterm supplier NMDC stopped supply of the raw material. The state-owned company was adhering to the apex court order for selling all its ore from the state through the e-auction route.
Industries need predictability in the flow of raw materials and stable prices to remain competitive. Policy makers should be committed to improve the conditions of access to raw materials, be it within India or by creating a level-playing field in accessing such materials from abroad.
Our preoccupation with short-term price movement often ignores the potential of a more circular economy to increase economic resilience. Over a period of time, the pressure on raw materials will increase substantially. Therefore, we will need to use raw materials in a much more sustainable manner as the present pattern of exploitation and consumption cannot be maintained and our production process, feedstock use, consumption patterns will need to radically change to ensure sustainable development.
No comments:
Post a Comment